Globus Medical, Inc. (NYSE:GMED) Q2 2025 Earnings Call Transcript

Globus Medical, Inc. (NYSE:GMED) Q2 2025 Earnings Call Transcript August 8, 2025

Operator: Welcome to Globus Medical’s Second Quarter 2025 Earnings Call. [Operator Instructions]. I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead.

Brian J. Kearns: Thank you, Haley, and thank you, everyone, for joining with us today. Joining today’s call from Globus Medical will be David Paul, Globus Founder and Executive Chairman; Keith Pfeil, President and Chief Executive Officer; and Kyle Kline, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical website at www.globusmedical.com. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-K for the 2024 fiscal year in our subsequent filings with the Securities and Exchange Commission identified certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today.

Our SEC filings, including the 10-K, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non- GAAP financial measures should not be considered replacements for and should be read together with the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available on the schedules accompanying the press release and on the Investor Relations section of the Globus Medical website.

With that, I’ll now turn the call over to David Paul, our Founder and Executive Chairman.

David C. Paul: Thank you, Brian, and good evening, everyone. I want to begin by congratulating Keith Pfeil on his promotion to the role as CEO of Globus Medical Effective July 18, 2025. Keith will lead Globus on setting and executing our strategy to become the preeminent musculoskeletal technology company in the world. Before joining Globus Medical, Keith built nearly 2 decades of experience in corporate finance, operations and strategic leadership. He began his career in public accounting with Arthur Andersen, later transitioning to KPMG, where he was primarily focused on financial audits and compliance. Keith later moved into the consumer products industry where he advanced through a series of finance and operational leadership roles, including serving in a divisional CFO role for several years and ultimately serving as Executive Vice President and CFO.

His tenure included extensive experience leading financial planning, M&A due diligence, Investor Relations, manufacturing and sourcing initiatives as well as large-scale restructuring initiatives that improved liquidity and operational efficiencies. Beginning in 2019, when Keith started at Globus as our CFO, it was obvious to me and our Board that he was destined to one day be in this CEO role. We quickly began exposing him to all aspects of our business over the last 6 years. In addition to finance, keep was given responsibility within the company in IT, operations, pricing, regulatory, quality and commercial. Finally, Keith led the financial due diligence and the entire integration planning effort for NuVasive and Nevro and has made amazing progress in a short period of time with both.

Keith has become an integral part of the Globus executive team, providing steady, positive and committed leadership that will now extend to the entire organization to drive our strategic goals. I also want to take this opportunity to thank Dan Scavilla for his many contributions to Globus over the last 10 years. He has been a great partner to Globus and me and has served with distinction for the last 10 years beginning with his role as CFO and his last 3 years as CEO. We wish Dan well in his new position at Dentsply. I will now turn the call over to Keith and Kyle for their comments on our quarter, and we’ll have a few words to say in closing at the end.

Keith W. Pfeil: Thank you, David. Good afternoon to everyone, and thank you for joining us on today’s call. This is my first earnings call as CEO following our July 21 announcement regarding the leadership transition, I’d like to take a moment to thank David Paul and the Board for their confidence in me. And I also want to take a moment to thank Dan Scavilla for his contributions to Globus as well as his guidance and mentorship to me over the past several years. I sit here today, excited for the opportunity and ready to begin a new chapter of the Globus story. Before I jump into a discussion on the Q2 company performance, I’d like to take a few minutes to step back and talk about who Globus is and where our strategy lies. Our strategy remains grounded in the same principles that have driven our success for many years.

Our mission remains unchanged. Globus Medical is a global musculoskeletal technology company dedicated to improving clinical outcomes and solving unmet clinical needs to improve the lives of our patients. We innovate with passion, provide world-class dedication and clinical support and advanced care through our comprehensive product portfolio. We will continue to support and advance care and focus on the patient with the goal of improving musculoskeletal care. Doing so in a manner that exhibits financial discipline. Our leadership team is aligned towards this pursuit. Globus has seen tremendous growth in change, starting with eclipsing $1 billion in annual revenue in 2022 and followed by the transformative merger with NuVasive in 2023 and then most recently, the closing of the Nevro acquisition.

All of this coming from a company that was founded just 22 years ago in 2003. The growth and evolution of the company remains second to none and highlights the strategic focus of living its mission. The change of the past several years has helped further position us within the musculoskeletal market. And we’re at a point where we want to finalize and fully integrate the merged and acquired entities. Our team is intently focused on accelerating our product development engine to launch new and exciting products. These exciting products will add to our best-in-class bag, which will further propel our ability to retain and grow our sales force through competitive rep conversions. We will continue to do this in a manner in which Globus maintains financial prudence with strong earnings, cash and cash flow and overall balance sheet strength, all of which is consistent with our history.

In short, I want everyone joining us today to know that Globus has many opportunities in the pipeline to fuel future organic growth and we remain confident in our position within the market. Knowing that our business has undergone dramatic change in the past few years, we have invested heavily in our leadership team to ensure focus and strategy development occurs at the right level within the organization such that M&A activities don’t distract from the existing businesses. Those leaders are specifically focused on our core categories of spine, ortho trauma, and interventional pain and are responsible to execute commercial strategy while maintaining responsibility for product development time lines. Now let’s move into our update on the second quarter.

I will start by touching briefly on top level financial performance, then provide more qualitative updates on our business and Q2 performance. I’ll then turn things over to Kyle, where he will go into greater details on our Q2 financial results. At a top level, Globus delivered Q2 sales of $745 million and non-GAAP EPS of $0.86 per share, growing 18.4% and 14.1%, respectively, over the prior year quarter. Free cash flow was $31.3 million, growing 18% despite the impact of the Nevro acquisition as well as higher CapEx spending. Our base business delivered $651 million in revenue during Q2 and growing 3.3% as reported and 4.9% day adjusted versus the prior year quarter with 1 less selling day in the U.S. and 2 fewer days in Japan. Nevro contributed $95 million in revenue during the quarter.

Operational challenges noted in our first quarter comments have largely subsided as the supply of product has dramatically improved across our business. Delivery of U.S. spine sets and inventory returned to a normal cadence, while supply of international spine and growing rods increased gradually throughout the quarter. Overall, we exited Q2 in a strong position with product and sets. We will continue to ramp up our supply as we enter the back half of our year to accommodate for anticipated growth, including the normal Q4 seasonal bump. Our U.S. Spine business led the way commercially, growing 5.7% as reported or 7.4% on a day adjusted basis. The key procedures or categories leading growth included expandable TLIF with our SABLE implants, posterior cervical with Reline-C, ALIF procedures with HEDRON and modulus implants as well as continued increasing contribution from MIS pedicle screws, namely Reline MAS and CREO, biologics as well as our DuraPro oscillating drills.

Growth in U.S. Spine has been consistent and sustaining driven by increasing focus on key areas of the business. Every week in Q2 had shown growth versus the same week in the prior year, we are now 19 consecutive weeks of U.S. Spine implant growth, which includes a strong July and a great start to August. Growth in our core business is being driven by several factors, including increasing set and inventory availability driving targeted product conversions, competitive rep hiring as well as a key focus with increasing our surgeon engagement. All of these factors are key to growth as we continue on the basics of launching new products, growing our sales force and driving robotic pull-through. To highlight the importance of new products, I’d like to take a minute to talk about our DuraPro drill system.

As a refresher, this product was launched in 2024 and features an oscillating technology designed to be soft tissue sparing, allowing surgeons to treat anatomy adjacent to delicate tissue. We are seeing accelerated levels of growth in this product since launch, fueled by surgeon-to-surgeon testimonials. Moving forward, we see this product as a game changer and have ramped up supply with increasing levels of sets being delivered to our field to fund this growth. Enabling technologies experienced a bounce back in Q2, growing 58% sequentially to finish at $35.2 million. Despite the sequential improvement, Q2 sales were lower by 4% compared to the prior year quarter, driven by lower sales of EGPS robotic systems, partially offset by growing sales of E3D imaging systems.

While we closed many robotic deals from Q1 in the second quarter, we are still experiencing an elongation in the selling cycles. We see these deals as alive and active and seek to drive a strong second half. Importantly, feedback from our surgeon customers who use our robotic systems remains incredibly positive with respect to its features and capabilities as they exist today. We will aggressively seek to close down open opportunities as we move ahead. Over the long term, we expect robots and robotic procedures to grow within spine and believe that robotic surgery will be the standard of care for patients suffering from spine disorders. To date, we’ve seen almost 110,000 procedures and expect this to continue to grow as adoption becomes more widespread.

Our international spine business grew roughly 4% as reported, but was essentially flat on a constant currency basis. I commented earlier on the improvements in the supply chain as we move through the quarter. I’d like to take a few moments to provide some additional insight. Breaking our international business into regions and key countries, we see growth across our EMEA region, led by the U.K., Spain, Germany, Ireland and Italy. The interest in Globus products across EMEA remains high, driven by our key differentiators, namely our product portfolio, technologies and service levels. The combination of these factors drives interest from our customers while also attracting competitive reps. Our second quarter saw the quarter-over-quarter growth improve versus Q1.

We expect this trend to continue looking ahead as the supply of product continues to drive incremental growth. Within the APAC region, we’re continuing to focus on our largest markets, which are Japan and Australia. Recent trends are showing success in these selling markets. However, we continue to see opportunity to generate additional share growth in these core markets moving ahead. The LatAm region, our smallest international region, has been most impacted by sales shortfalls in Brazil, which are a combination of a slowing market as well as isolated supply issues. We will continue to focus on this key market moving forward and see the flow of product improving in Q3 and Q4. The overall strategy of our international business is to focus on key markets and go deeper in those markets to drive higher share positions.

As we continue with our international integration, we view this strategy as key to overall long- term international success. While this may result in some near-term impacts on growth rates, we view this as the right approach long term to ensure the health of our international business. Our core trauma business grew 35% in Q2 compared to the prior year quarter, while our NSO growing rod business declined during the quarter. However, this was largely due to the lack of supply to our international markets. The increased supply of growing rods that hit the market in Q2 was focused on replenishing the U.S. market first, followed by international locations. Reaching a steady state of supply with manufacturing of our precise line has allowed us to serve a larger scale of patients, including pediatric patients during the summer months, which bolsters our position in the U.S. while ramping revenue internationally, which will favorably impact us moving ahead.

The core trauma portfolio continues to grow rapidly, driven by product investment and a keen focus on driving density in our business. Our approach to growth using a density model is focused on areas and institutions we see driving the greatest long-term benefit. Key products such as our AUTOBAHN line of nails and ANTHEM plates provides for differentiated product offerings versus competition, which our surgeon customers recognize. These products, along with our Precise line of products, is allowing us to break down doors and open new accounts across the U.S. Our core trauma bag can compete with the competition. Adding precise only fosters a strengthening position for us in the marketplace. That, coupled with our desire to continue to innovate, positions this business well for the future.

As we grow, we will add to our direct sales force in a manner that supports our density model. Innovation will drive opportunities, allowing us to target the right accounts in a manner that will drive sustainable top line profitable growth, which will create a flywheel of attracting the top-selling talent in the industry. Our neuromonitoring business performed in line with expectations in Q2, showing a sequential improvement and a narrowing quarter-over-quarter decline. Our expectations for this business for the remainder of the year are consistent with our initial expectations coming into fiscal 2025. Case insights are taken from this business, which can be used in better assessing our hardware as well as the competition. The neuromonitoring service delivers trusted clinical support beyond just the implant sales, which increases our brand positioning, leading to a portfolio synergy with the product and service overlap.

I’d like to spend a few moments discussing Nevro and provide some additional insights behind the strategy to add this to our portfolio. Thinking back to some of my opening comments about Globus, its mission and approach, we’ve been focused on providing the best solutions to address the continuum of care for patients suffering from musculoskeletal disorders. Acquiring Nevro allowed us to expand our continuum of care and address this submission from our product portfolio. Spinal cord stimulation has been proven to be an effective therapy for patients who had a previous spine surgery that did not resolve their back or leg pain as well as for patients who suffer from back pain that is not addressable by spine surgery. Since announcing the transaction, feedback from spine surgeons as well as pain physicians has been universally positive.

Pain doctors are encouraged with Globus acquiring the Nevro brand, knowing that high-frequency spinal cord stimulation will continue to be available for their patients. Neuromodulation and the Nevro high-frequency approach is an effective therapy for other disorders such as painful diabetic neuropathy. In addition to pain, we see value in the intellectual property of this business to explore other applications of electrical stimulation. We are excited to explore these areas, including treating Gait disorders in Parkinson’s disease patients as well as other unmet clinical needs. Our long-term goals are to drive top line growth with these products as we enter a new addressable market. To do this, we’ve already recast our product development approach as we seek to drive organic innovation.

Integration activities are underway with our first major actions to address cost occurring at the end of Q2. We seek to drive a swift integration such that we put Nevro on a sustainable path of growth and profit. Since the beginning of 2024, we have launched a total of 21 new products, 14 products within spine, 3 trauma products and 4 joint products, with the most recent product being the ONVOY Acetabular Shell launched during our second quarter. The ONVOY Acetabular System is a contemporary acetabular system for cementless reconstruction and total hip arthroplasty procedures. This product is launching to further improve our competitive position in primary hip. Filling gaps in our portfolio over the next 12 months will allow us to more aggressively scale our hip and knee business in the next 12 to 18 months.

I’m pleased to announce we recently received FDA clearance for Excelsius XR, our head-maned augmented reality navigation headset. Used with ExcelsiusHub and ExcelsiusGPS as well as Excelsius XR allows for real-time surgical visualization by projecting 2D data and 3D models to allow the user to look at the patient and virtual navigation data at the same time. Excelsius XR also provides instrument tracking capabilities for navigated placement of screws and interbody fusion devices and contains hand-tracking cameras that allow the user to manipulate the head-mounted display. We look forward to bringing this exciting innovative technology to surgeons in the coming months. Looking back on Q2, I’m encouraged by the progress made across the business.

Our U.S. Spine business is showing tremendous strength, positioning us for a strong second half. We remain positive about our enabling tech business with the size of our pipeline and the energy of our sales force to close open opportunities to foster a strong second half. The supply chain challenges noted in Q1 have been largely resolved, while we remain active with manufacturing initiatives. We are positioned to deliver inventory and sets across the business to facilitate planned sales growth. The base Globus business delivered adjusted EBITDA margins of 32.3%, growing 210 basis points over the prior year quarter. Significant progress was made with rolling out cost controls within Nevro as the business finished at a near breakeven adjusted EBITDA without seeing the full impact of all cost actions planned.

Aligning the cost structure position will position us well looking ahead while we continue with this integration. We remain debt-free while we continue to invest in the business and are generating strong free cash flow. We are driving synergy capture, including identifying and realizing nonoperational synergies from our recent M&A activity. All of these are aligned with the long-term Globus philosophy. My strategic priorities are focused on continuity to build on the existing strategy, which will be achieved via a framework of accelerating innovation and operational excellence, driving organic growth. We will cultivate a culture of leading and invest in our people to develop the future leaders of tomorrow. Looking into the vision of this framework, we will develop new tools within the R&D pipeline, drive manufacturing initiatives to return to a mid-70s adjusted gross profit profile, achieve market share gains, accelerate our first-mover strategy while creating career pathways for our employees.

I’m thankful to all of our Globus team members for their hard work and dedication to get us to this position and remain encouraged with our trajectory as I feel we are well positioned to drive sustainable growth. Before turning the call over, I’d like to take a few moments to introduce our new CFO, Kyle Kline. Kyle joined Globus in 2017 as an Assistant Controller after a successful 10-year career with Deloitte. Since joining Globus, Kyle has held several roles of increasing responsibility, each time learning more about the underpinnings of our business. When I joined Globus in 2019, Kyle was integral to helping me develop a team and more importantly, a mindset on how to approach things. He is a trusted confident of mine, and I couldn’t be more thrilled to have him become the next CFO of Globus.

Kyle will do great things in this role, and I wish him continued success. Congratulations, Kyle. I will now turn the call over to you.

Kyle Kline: Thanks, Keith, and good afternoon, everyone. I’d like to start today by thanking David Paul, the Board of Directors and Keith for this opportunity. I am thrilled to be taking on this role and partnering with Keith in the talented Globus leadership team. In my 8-plus years with Globus, we’ve seen remarkable growth and change in our business, and it’s been a career highlight for me to be part of what we’re building here, alongside the best and brightest professionals in the industry. As Keith mentioned in his prior comments, on April 3, 2025, we closed our acquisition of [ Nevro Inc. ] after Nevro shareholder and regulatory approval. The purchase price of $252.5 million was paid using existing cash reserves. The resulting impact of the April 3 acquisition of Nevro is such that my discussion on our results will seek to identify the underlying legacy Globus Medical results as well as the contributions from the inclusion of Nevro financial information.

Our Q2 2025 results include 3 months of legacy Globus financial information and 3 months of Nevro, reflective of the April 3 acquisition closing date. My comments today will provide insights into our quarterly business performance, including the impacts of Nevro, our capital allocation priorities as well as views on overall guidance for the remainder of the year. As I move through my discussion this afternoon, I will first comment on our as-reported results, providing insights into the legacy Globus business as well as high-level comments on the contributions from Nevro on an as-reported basis. All information is presented based on Globus accounting policies and is consistently applied in the as-reported results from legacy Globus and legacy Nevro.

We are extremely pleased with our second quarter results, both with and without the impact of Nevro. The headlines for the quarter include: one, above-market sales growth in our U.S. Spine business; two, record non-GAAP earnings per share of $0.86; and three, a bounce back in enabling technologies sales. Adding to Keith’s comments, our sales results clearly demonstrate that we are driving market share growth and are executing our strategies around product, sales force and integration. Moving into the quarter. Our second quarter revenue was $745.3 million, growing 18.4% on an as-reported basis and 17.6% on a constant currency basis as compared to the second quarter of 2024. GAAP net income in the second quarter of 2025 was $202.8 million and GAAP fully diluted earnings per share was $1.49, reflective of the impact of both a bargain purchase gain of $110.6 million and partially offset by $28.8 million of merger and acquisition-related costs resulting from the April 3 acquisition of Nevro.

The bargain purchase gain which for accounting purposes is recognized in the period as a benefit to the P&L is primarily driven by the value of certain deferred tax assets, specifically federal net operating loss carryforwards with indefinite lives that were acquired in the Nevro acquisition. As the legacy Nevro business did not historically generate profit, these tax benefits were not able to be utilized under its structure. However, upon acquisition, the combined Globus profit profile allows us to recognize and utilize $141.5 million of these deferred tax assets, which will generate cash tax savings over a prolonged period. In our acquisition of Nevro, Globus acquired net tangible assets from Nevro of $168 million, which consists primarily of inventory and accounts receivable and another $141.5 million of the deferred tax assets described a moment ago.

Coupling this value with the intellectual property portfolio and the deal rationale that Keith discussed in his opening remarks, highlights why we feel the Nevro acquisition was a strategic opportunity for us. Returning to results for the quarter. Non-GAAP consolidated net income was $116.8 million compared to $102.7 million in the prior year quarter, growing 13.7%. Our fully diluted non-GAAP earnings per share was $0.86, growing 14.1% over the prior year quarter. Consolidated adjusted EBITDA was 28%, and we generated $77.9 million of operating cash flow and $31.3 million of free cash flow during the quarter. Our legacy Globus adjusted EBITDA was 32.3%, while legacy Globus operating cash flow was $104.2 million and free cash flow was $60.3 million.

Our second quarter net sales of $745.3 million reflect legacy Globus sales totaling $650.8 million, growing 3.3% as reported and 4.9% on a day adjusted basis, with 1 less selling day in the U.S. and 2 fewer days in Japan compared to the prior year. The growth in our legacy Globus sales was primarily driven by U.S. Spine, which achieved 5.7% as reported and 7.4% day adjusted growth. Nevro contributed $94.6 million of revenue during the quarter, inclusive of $82.1 million of domestic revenue and $12.5 million of international revenue. Musculoskeletal revenue was $710.2 million, growing 19.8% over Q2 2024. Legacy Globus musculoskeletal revenue was $615.6 million, growing 3.8% as reported. Enabling Technologies revenue was $35.2 million, declining 4.4% as reported, but growing sequentially 58.5% over Q1 2025.

We saw a bounce back in Enabling Tech during Q2. However, we continue to be impacted by extended time lines to close deals in the quarter. Despite the headwinds created by these extended time lines, we remain confident in our Enabling Tech business, driven by our robust pipeline and the sequential improvement from Q1 to Q2. U.S. revenue during the quarter — the second quarter of 2025 was $600.8 million, growing 20.3% as reported. Legacy Globus U.S. revenue during the second quarter of 2025 was $518.7 million, growing 3.8% versus the prior year quarter. Our legacy Globus U.S. growth was primarily driven by our U.S. Spine business and trauma, partially offset by declines in enabling technologies and neuromonitoring. Our U.S. Spine business continues to build momentum, getting us back to high single-digit growth and achieving its highest growth on a pro forma basis since prior to the NuVasive merger in September of 2023.

Our U.S. Spine business continued this momentum in July and early August, and our confidence remains high in our ability to capture above-market growth in this business. Q2 2025 international revenue was $144.6 million, growing 11% as reported and 7.5% on a constant currency basis. International revenue for the legacy Globus business was $132.1 million, growing 1.4% as reported and declining 1.8% on a constant currency basis compared to the prior year quarter. Legacy Globus saw growth in many of our direct markets, primarily in EMEA, partially offset by lower international distributor sales as we felt lingering impacts of the Q1 supply chain interruptions and integration driven by consolidation of distributors and transitioning certain geographic markets from distributor to direct.

However, as Keith mentioned, the supply chain impact dissipated as we moved through the quarter with each successive month in Q2 growing sequentially. Overall, we saw a sequential improvement in legacy Globus International revenue, growing 15.6% over Q1 2025. GAAP gross profit in the quarter was 63.3% compared to 55.2% in the prior year quarter, with the resulting improvement driven primarily by lower inventory step-up amortization. Adjusted gross profit was 67.4% compared to 67.2% in the prior year quarter, primarily driven by synergy capture and partially offset by sales mix. Legacy Globus non-GAAP gross profit was 67.6% versus 67.2%, primarily driven by favorable sales mix and partially offset by increased depreciation from CapEx investment in sets and instrumentation.

Nevro non-GAAP gross profit was 66.4%. We continue to receive, set up and validate machinery and equipment in our manufacturing facilities in Pennsylvania and Ohio as we remain focused on manufacturing initiatives, which are beginning to pay dividends in cash spending on inventory and will drive a return to mid-70s adjusted gross profit. Research and development expenses in Q2 2025 were $40 million or 5.4% of sales compared to $37.7 million or 6% of sales in the prior year quarter. Legacy Globus R&D expenses totaled $33.1 million or 5.1% of sales. The resulting decline in legacy Globus R&D, both in dollars and as a percentage of sales is attributable to synergy capture, resulting in lower headcount. Nevro R&D was $6.9 million or 7.3% of Nevro sales.

SG&A expenses in the second quarter of 2025 were $303.6 million or 40.7% of sales compared to $239.5 million or 38% of sales in the prior year quarter. Legacy Globus SG&A expenses were $242.9 million or 37.3% of sales. The increase in spend is attributable to increased sales compensation costs from higher volume, increased third- party spend and higher employee benefit costs, partially offset by lower bad debt expenses. Nevro contributed $60.7 million of SG&A expenses in the quarter or 64.2% of Nevro sales. Q2 2025 net interest income was $0.7 million compared to $2.3 million of net interest expense in the prior year quarter. The $3 million favorable change is being driven by a decline in interest expense from the paydown of the remaining $450 million of outstanding convertible debt in Q1 2025 that was assumed from the NuVasive merger.

The GAAP tax rate for Q2 2025 was minus 7.8% compared to 33.2% in the prior year quarter. The current quarter includes a $34.8 million onetime tax benefit, which is primarily driven by the discrete nature of the release of a valuation allowance against previously reserved R&D credits acquired in the NuVasive merger. The restructuring of our business post integration and the cost actions taken to increase profitability of the combined business have provided for this tax benefit that results in cash tax savings in future periods. Our non-GAAP tax rate for the quarter was 25%, adjusting for the onetime nature of the valuation allowance benefit mentioned a moment ago. We expect our full year non-GAAP tax rate to be approximately 25%. Cash, cash equivalents and marketable securities were $229.4 million at June 30, 2025, compared to $956.2 million at December 31, 2024.

The decline in cash is driven by 3 main factors: One, as mentioned last quarter, in March, we fully repaid in cash the remaining $450 million outstanding convertible debt assumed from the NuVasive merger. Two, in April, we acquired Nevro for a purchase price of $252.5 million; and three, during the past 2 quarters, we’ve spent $215.4 million to repurchase approximately 2.9 million shares. As mentioned during our Q1 2025 earnings call, our existing $500 million share repurchase program was completed during Q1 2025. In Q2 2025, we announced that our share repurchase program was expanded by an additional $500 million. During the quarter, we repurchased $25 million or 0.4 million shares and have $475 million of authorization remaining under this program as of June 30, 2025.

Q2 net cash provided by operating activities was $77.9 million and free cash flow was $31.3 million. On a trailing 12-month basis, we’ve generated $669.2 million of operating cash flow and $527.4 million of free cash flow. This strong cash flow generation is driven by continued sales growth, execution of synergy actions and working capital improvements, specifically in accounts receivable. Since closing the NuVasive merger in September of 2023, we have paid off $871 million of inherited debt invested over $525 million in share repurchases and acquired Nevro for a purchase price of $253 million, utilizing our existing cash, all the while building back up our cash reserves to $229 million. Our capital allocation priorities remain unchanged as we will continue to prioritize internal investment in product development, sets and CapEx, evaluate complementary M&A and opportunistically repurchase shares while focusing the use of our capital on driving investment for long-term profitable growth.

Upon closure of the Nevro acquisition, we established that our primary goal is to drive top line growth while rightsizing the profitability of the business. To accomplish this, we immediately recast their R&D approach to product development began work on integration planning and started evaluating synergy opportunities. As we’ve commented on previously, our plan for integration is aggressive as we seek to achieve steady state as soon as possible. We remain bullish on our previous comments in relation to Nevro being accretive to earnings in the second year of operation and are beginning to see the impacts of our synergy actions on results. During the quarter, we began seeing impacts from tariffs on both the legacy Globus and legacy Nevro businesses.

As expected and previously communicated, these tariff impacts were not material to our results, although we continue to monitor the impacts of changes. Turning our attention to financial guidance. We are reaffirming our guide of 2025 net sales to be in the range of $2.8 billion to $2.9 billion and fully diluted non-GAAP earnings per share between $3 and $3.30. The Globus team continues to execute key initiatives of developing and launching products, competitive recruiting, integrating systems and processes and driving cost actions that set the stage for continued long-term profitable growth and value creation. The above-market growth in our U.S. Spine business and our relentless pursuit of operational efficiencies drove our record non-GAAP earnings per share this quarter and the momentum of that business, along with enabling technology sales sets us up for sustained growth in the back half of the year.

The entire Globus team, including the new Nevro colleagues, continue to execute our vision and strategy. I am proud to stand by their side and drive further success in 2025 and beyond as we build towards being the leading musculoskeletal technology company in the industry. Before we finish our prepared remarks, David would like to make a few closing comments.

David C. Paul: Thank you, Kyle, and congratulations on your new role. I am looking forward to working with Keith in his new role as he leads Globus forward. I have never been more excited about our future prospects as we are reimagining the operating room and musculoskeletal surgery to drive better patient outcomes. Our Excelsius ecosystem will play a large role in this transformation with our suite of imaging, navigation and robotic systems leading the way. Our unwavering commitment to improving surgical outcomes and solving unmet clinical needs continue to be the motivation for all of us to work toward. We remain committed to bringing exciting technologies to market with our R&D engine to achieve our goal of improving the lives of patients with musculoskeletal disorders. Thank you for joining our call today. We will now open the call for questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Matt Miksic from Barclays.

Matthew Stephan Miksic: And congrats on the quarter and congrats, Keith and Kyle on the new role. And I just want to say, David, it’s nice to hear your voice on the call. So the first question or first part of the question, maybe just on the progress you’ve made so far with Nevro. I think last time we talked, you were just about to begin or beginning some of the sort of cost and efficiency programs and weren’t really sure how that was potentially going to affect the organization, particularly on the sales side. And I wanted to get a sense of how that’s going, what your read is at this point? And then I had one follow-up, if I could.

Keith W. Pfeil: Sure. Thanks, Matt. This is Keith. I think that what we’ve got accomplished in the second quarter, we’re cautiously optimistic. I think that as we’ve approached this, leadership has really surrounded the sales force, number one. They’re really energized to be part of the Globus family now. They see the future. They understand kind of where we’re going. So I think that, that’s been a positive for us going along with working on cost containment activities. As we started the quarter, we really overlaid the Globus approach to controlling third-party spending. And I think that, that starts to show a benefit early on in the quarter. But the large cost actions that happened didn’t really happen towards the — until the back end of the quarter.

So as I sit here today, I feel positive about where we’re going. And again, leadership is very focused on working with the sales force because the long-term goal, like I spoke about earlier, is we want to — we recast product development, but we want to grow this business long term. And I think that commitment is going to go a long way with the sales force.

Matthew Stephan Miksic: Great. And then just a follow-up on robots, of course, and enabling technology. You’ve had time to get through the tail end of Q2. I mean, there was a lot of questions, I think, still after Q1 as to what exactly happened? Was it a shift towards financing? Was it something to do with the uncertainty in that moment? What have you learned or what can you tell us about the pipeline and how deals are closing? And what factors, if any, are shifting or changing the way that business is running in terms of the placement side?

Keith W. Pfeil: Sure, sure. So Enabling Tech had a bounce back here in Q2. Obviously, Q1 was soft. What I saw in the quarter was us being able to close deals from Q1. I still see that elongation pipeline. As I think about how robots are sold, we’re still selling outright the majority of our robots. But again, we have the ability to offer multiple ways of selling the robot, and we’re taking advantage of that. As I look at our pipeline, I don’t see us losing deals to competition. That’s — there’s been a question from folks over the last couple of months. And I don’t see that happening by and large. As I look at Globus and EGPS, I view our #1 competitor as Medtronic. We go head-to-head with them, but we still think the superiority of our technology puts us ahead of the class.

Operator: Our next question comes from the line of Vik Chopra from Wells Fargo. Vikramjeet Singh Chopra Wells Fargo Securities, LLC, Research Division Congratulations to both Kyle and Keith. Two questions for me. Maybe first one on a high level. Maybe just talk about how you plan to evolve your investor communication strategy, especially around Globus Medical’s guidance methodology? And then I had a quick follow-up, please.

Keith W. Pfeil: So in terms of Investor Relations strategy, I think that in the near term, you’ll see us out on the road a bit more. We’ve been fairly active with Investor Relations thus far here in 2025, coming off what I would call a fairly heavy second half in 2024. We’ll continue to evolve as time passes. And then in the future, we’re going to have an Investor Day. We haven’t announced the actual date yet, but there will be more investor outreach occurring as time passes.

Kyle Kline: Yes. And the only thing I’d add to that, Vik, is as we’ve been doing more of the Investor Relations activity over the back half of the year, I’ve started to come along on some of those. So I expect to be out there as well, more front and center and working with you guys out in the field. Vikramjeet Singh Chopra Wells Fargo Securities, LLC, Research Division Great. And congratulations on your approval for the augmented reality headset. Maybe just talk about the latest on the time lines for launch and how this will integrate into the broader Excelsius ecosystem.

Keith W. Pfeil: Sure, sure. So we’re in the process of beginning quoting XR. Finished goods supply is ready. And really now it’s about rolling out the launch plan. As I think about XR, the team spent a ton of time doing extended viability testing with surgeons and everyone that’s been part of it has come away very excited. As we think about XR, the value proposition is line of sight for the surgeon, surgeon control, allowing them to keep their eyes on the patient. And the surgeon will be able to have hand tracking with — that will keep sterility. So they’re not going to have to touch a screen or do anything like that. As we think about XR, really, what we’re looking to do is pair that with our ExcelsiusHub and E3D or pairing it with EGPS. But for now, we’re focused on hub with XR and E3D. We think that would be the best navigation package out there in the market, and we’re excited to move it forward.

Operator: Our next question comes from the line of Shagun Singh from RBC.

Shagun Singh Chadha: I wanted to touch on the CEO transition and the leadership transition. So maybe this question is for Dave since you’re on the call. We’ve seen 2 within a matter of a few years, both around acquisitions. And I was just wondering if there was any commentary you can share for investors who may be wondering about this and the company’s internal leadership. I’m very aware of the established internal leadership succession plans that you have. So really no surprise there. But just, Dave, maybe you can also comment on how your involvement may have or is evolving here with the company. And then I have a quick follow-up.

David C. Paul: Thank you, Shagun, for your question. Our leadership bench has always been broad and deep, and we’re always developing leaders. The 40 leaders we have within the company at the senior level have on average 20 years’ experience in MedTech. The Board has always been very deliberate about succession planning. Dan found an opportunity he wanted to take, and Keith was ready to step into his role. So we found this was the right timing for this. We’re 100% confident in Keith and in Kyle. So we feel that this is an inflection point in Globus’ growth rate. As far as changes, we’ve always cherished continuity in leadership, and we’ve had that over the years. And we’ve had 4 CEOs over the last 22 years and 2 are still within the company.

So I feel like our continuity in leadership is second to none in our industry. And as far as my involvement, Shagun, I keep the same involvement that I’ve had. I work heavily in R&D and product development and strategy. I’ve been working with the CEO and the CFO and the presidents and the heads of product development. And that’s where I see my biggest benefit for Globus is to focus on R&D.

Shagun Singh Chadha: Great. That’s really helpful. Just I guess, as my second question, I wanted to touch on Nevro. Can you maybe elaborate a little bit more on your strategy to get Nevro back to growth? Obviously, you’ve talked about the sales force, them being part of Globus Medical, having a new sense of energy there. But what are you hearing from the field? What were the key issues at Nevro when it was a stand- alone company that you can address with your leadership?

Keith W. Pfeil: Thanks, Shagun. I think there’s a couple of parts to that. I think first and foremost, one of the things that we want to bring to Nevro is stability and approach. I commented on really taking and recasting our product development approach. And that’s really looking at what’s in the pipeline from the standpoint of true new product development versus sustaining projects. We’ve really worked to hone that and get them on a path to move forward. Number two is just the strategic approach from a commercial perspective. We want to be consistent in our application. And as we talk to people, it seemed like there was maybe some moving around of what the strategy was at Nevro historically prior to acquisition. So really, we want to get them on a stable course forward.

The third thing I would say is really bringing them into the Globus umbrella really allowed the customer and the hospital and surgeon community to know that this business is going to be around long term. I think given some of the financial challenges that Nevro had previously, there was a question as to whether or not that they would be around. I think bringing that all together here positions us well to take this business and grow. And it really ties back to what I had said earlier regarding an earlier question that the sales team is really galvanized and pumped up about that because they see a path forward with Globus.

David C. Paul: One thing I’ll add to that is Nevro has the only differentiated technology within neuromodulation. Also the only technology that has Level 1 clinical data showing superiority using high frequency for pain. So I think it’s very exciting to have a clearly differentiated product. And now having the certainty of Globus behind them, the sales force is pumped up, as Keith said, to continue growing.

Operator: Our next question comes from the line of Matt Taylor from Jefferies.

Matthew Charles Taylor: I wanted to follow up on some Nevro stuff. So one comment you made in the prepared remarks was that the business finished your EBITDA breakeven even without all the cost measures. And I guess you’re still targeting accretion in the second full year, but those 2 things seem like you could get to accretion more quickly. Help me understand better, I guess, the pathway from where you finished to that accretion goal?

Kyle Kline: Yes. Thanks, Matt, for the question. This is Kyle. So where I’d start is pointing you back to what we talked about last quarter is as we go in and take some of these cost actions and change some of the business, we’re not targeting changing and impacting sales, but there is some risk as we go through and make some changes inside the business that we could have a bleed over into sales. Profitability, we do feel good about, but there’s a lot we don’t know about the business. 3 months in, we’ve been able to, at the end of the quarter, come out with some synergy actions related to headcount and OpEx, et cetera. But we want to be able to have a little bit more time in that business before we truly see what that’s going to look like by the time we get to the end of the year.

David C. Paul: The only thing I would add to that is just looking at where we’re at right now, given some of the other comments, we’re cautiously optimistic, but there’s still 6 more months of this year to go before we get to 2026.

Matthew Charles Taylor: Great. Could I ask a follow-up on Enabling Tech, nice bounce back sequentially before you had made some comments that you might still be able to get back to double-digit growth this year. And I wondered if that was still in play? Or could you help us think about how strong the back half could be?

Keith W. Pfeil: So I guess the way I would answer that is if you look at the back half of last year, our enabling Tech business grew, give or take, 25%, which is about — I want to say it was about $25 million. $25 million. If I was going to finish double digit this year, I have to grow 27%. So it’s possible, and we feel like we have the pipeline to move the business forward.

Kyle Kline: Yes. I think it really goes back to how we feel about, a, the momentum into Q2 as well as what’s in the pipeline, the amount of quotes that are out there that says, right, we do feel good. It’s in the realm of possibility that we can get to double digits in sales.

Operator: Our next question comes from the line of Ryan Zimmerman from BTIG. Ryan Zimmerman, your line is now open for your questions. Our next question comes from the line of Richard Newitter from Truist Securities.

Richard Samuel Newitter: I wanted to maybe just start, can you just run through the components and what’s changed in the guidance to get to your updated outlook with just the moving parts from 1Q to 2Q, especially since you saw a really nice snapback in the U.S. core spine business. It sounds like international is maybe we should be dialing in a little bit lower there. And specifically, what should we dial in for Nevro 2Q to 4Q?

Kyle Kline: Yes. Thanks for the question, Rich. So just to kind of step back and think about guidance, right? We set out initial guidance back in Q4, both as a stand-alone and then with Nevro. In Q1, when we finished our results and announced that we were acquiring Nevro, we restated what our guidance would be, right? And we said it would be $2.8 billion to $2.9 billion in revenue and $3 to $3.30 from an EPS standpoint. Then we had Q1, which was obviously lighter and a little bit disappointing both in top and bottom line. And now we have a solid Q2 beat from a sales perspective as well as on the EPS front. We feel comfortable in the range of our guidance and where we sit today. We don’t think anything that we’ve seen tells us we should necessarily increase it or decrease it based on where we’re at 6 months into the year.

Richard Samuel Newitter: I guess can you just run through the components? What went up, went down? I know currency got a little bit better. How much does that kind of help and where the offsets are? Should we be dialing down international and led to some of your comments? It sounds like capital, you’re still confident in growth at a minimum, possibly double digits. So just could you just help us think through the pushes and the pulls since your initial outlook because you are reiterated?

Kyle Kline: Yes. Rich, yes, we don’t get into those parts and pieces of the guidance. But I agree with you. We feel — we do feel confident on U.S. Spine that you’ve heard. We do feel confident with enabling tech. You’ve heard about some of the headwinds. But ultimately, we feel good about our range of our guidance.

Operator: Our next question come from the line of David Saxon from Needham & Company.

David Joshua Saxon: Needham & Company, LLC, Research Division Keith and Kyle, congrats on the new roles. In the script, you — yes, of course, you were talking about the manufacturing progress to drive to mid-70s gross margin over time. I guess how should we think about the next milestones and the cadence to get there? I mean, is this like a 12- to 18-month journey? Or would it be any shorter or longer?

Keith W. Pfeil: Yes. So when we — as we — this is Keith. I’ll take that. So as we talked about initially with the NuVasive deal of $170 million in synergies, we really talked about year 2 that focuses on your manufacturing in-sourcing that’s going to generate expanded gross profit in year 3. So as you think about that, Kyle had some comments that talked about looking at lower cost in inventory. So if you think about cash flow statement, you’re seeing lower investment in inventory. And really, that’s driven by some of the manufacturing initiatives. So the way to think about that is that inventory is on our balance sheet and that inventory will push through the P&L next year to drive that benefit. So those benefits of expanded gross profitability really are 2026. And as you think about that, that is going to be a cadence as the year moves forward

Kyle Kline: Yes. The only thing I would add to that is remembering now that we have Nevro, right, and they’re approximately the same in terms of our gross profit percentage. They were 66%, give or take, this quarter. We’re obviously going to be focusing on the initiatives of manufacturing from our base implant business here, right? And then we’ll focus on Nevro after that. So that kind of gives you a little bit of a delay in that time period and how that will all play out.

David Joshua Saxon: Needham & Company, LLC, Research Division Okay. That’s helpful. And then I wanted to ask a follow-up on the NuVasive deal. And historically, you talked about cross-selling with enabling tech. I guess where are we in that? Does the macro backdrop kind of delay that opportunity? Or are you still — are you seeing deals kind of come through from the kind of accounts that are loyal to NuVasive?

Keith W. Pfeil: That’s a great question. I would say, yes, we are selling robots to legacy NuVasive accounts. As we commented a quarter or 2 ago, Reline is available to be used on the robot. That was a big gating item. That availability has helped propel additional quoting of the legacy NuVasive customer. There’s still more to do there. But from my perspective and from our perspective, we are active in cross-selling the robots to both legacy Globus and legacy NuVasive customers. Stepping back from that, we’re also cross-selling the implants across the entire portfolio.

Operator: Our next question comes from the line of Matthew O’Brien from Piper Sandler.

Matthew Oliver O’Brien: To Keith and Kyle on the new roles. Kyle, I don’t need to be confrontational here with our first interaction on a call, but I did want to follow up on Rich’s question just because you guys have mentioned specific numbers on Nevro for ’25. And specifically, when you bought it, it was a $400 million business, then you were kind of leading everybody to about a $300 million business this year, pro forma only owning the asset for 3 quarters, so kind of $225 million. So given the $95 million that you just did in Q2, that would equate to $130 million for the back half of this year, $65 million per quarter. Is that what we should be using? Or is it a higher number than the $65 million per quarter?

Kyle Kline: Yes. Thanks for the question, Matt. And back to, we’re not going to break out specific guidance. We wanted to give that as a directional understanding last quarter based on what you knew about Nevro and what we knew about Nevro at the time. Ultimately, right, I think regardless of where we fall kind of in the range for Nevro sales, we feel comfortable about our overall range of the $2.8 billion to $2.9 billion.

Keith W. Pfeil: Matt, the only thing I would add to that is it goes back to what we said a little bit earlier. We — the big headcount actions just happened here in the second quarter. There’s still a lot more of the year to happen. And as we get through the year, there’s still additional actions that will be taken that could impact potentially sales. So sitting here 6 months in, we feel that our overall guide is appropriate for where we’re at. And like I said earlier to an earlier question, we’re cautiously optimistic with where the Nevro business is, but we think it’s really still too early to make any broad-scale changes to what our views are from a guide perspective as we look further out.

Matthew Oliver O’Brien: Okay. Fair enough. And then on the EBITDA side, it was really good to hear that the adjusted EBITDA for Nevro was breakeven even though sales came in below what they did this time last year. So I think this — you kind of touched on this earlier, but is this kind of the low watermark for EBITDA for Nevro? Or could it be a little bit lower back half of this year? And what are some other potential areas of cost synergies because the SG&A number and R&D numbers are well below what they were spending. How much more room do you have to go there before you’re kind of cutting some of the muscle on the top line?

Kyle Kline: Yes. So the first part of that, I would say the EBITDA really depends on what happens with the sales. So it’s hard to say that that’s a low watermark line because we don’t know what’s going to happen in sales in Q3 and Q4. Separately, on the improvement in terms of metrics over prior year Nevro stand-alone, yes, I would agree we’ve made improvements. But still, if you look at that SG&A line, over 60% of their sales are spent through SG&A. That’s really the place we need to focus our attention as we move through the back half of this year.

Operator: Our next question comes from the line of Caitlin Cronin from Canaccord Genuity.

Caitlin Cronin: Canaccord Genuity Corp., Research Division So it sounds like you’re through the supply challenges related to the NUVA in-sourcing. But are you through just the NUVA in- sourcing efforts generally? Are there any more product lines to vertically integrate? And kind of what’s left from an integration standpoint more generally for NUVA?

Keith W. Pfeil: So this is Keith. I’ll take the call. Thank you for the question. So stepping back, I mean, the manufacturing initiatives are really multifaceted. So as you’re working on the NuVasive product, there’s also additional Globus product that you’re looking to further, I would say, manufacture internally. As you think about the year, the cadence of output from our manufacturing facilities will continue to increase as time passes because as we commented on or Kyle said something earlier, the machines are coming online and they’re programmed. Well, as everyone is learning that learning how to operate those machines, you would naturally expect output to become higher and higher as they become more efficient with running the machines.

So that cadence will continue. As you think about the integration overall, really the big things that are left is the international businesses and bringing them in onto one system. We talked about some supply challenges, which to me are largely behind us from the flow of product. But now it’s bringing together the sales forces internationally and bringing together where we’re operating. If you recall what I said in my prepared remarks, the international business, our goal is to go deeper in the countries that we’re operating in. We’re not looking to go broader and have a bunch of countries. We see the ability to take share in our major countries, and that’s a key focus might have some short- term impacts, but long term, that’s our approach.

Caitlin Cronin: Canaccord Genuity Corp., Research Division That’s great. And then you discussed earlier your ability to do flexible financing with enabling technology. Just with the elongated selling time lines, thoughts on any other initiatives to really speed up the time lines aside from that financing flexibility?

Keith W. Pfeil: I mean financing flexibility, I mean, obviously, we can offer terms. We can offer subsidized financing from an interest rate perspective. We can use third-party bank financing. I mean every kind of reasonable option that’s out there, we absolutely look at and give our customers a variety of options to pick from. Really, at this point, like I said earlier, the pipeline is strong. It’s got — we got to continue to close the deals. I don’t think there’s any shortage of offerings out there that we’re not doing.

Operator: Our next question comes from the line of Jason Wittes from ROTH.

Jason Hart Wittes: Congratulations on the promotions Keith and Kyle. So just a real quick one — sure. And just a quick one first. You mentioned the NOLs from Nevro. Was that part of the initial calculation you gave on sort of the profitability and dilution when you first announced the deal?

Kyle Kline: Yes. That answer to that question is no, this is Kyle. The NOLs were not part of that calculation.

Jason Hart Wittes: So this would definitely be — this would probably be upside towards just seeing, I guess, EPS accretiveness then, if I think about — and related to that, how long do you — what kind of time line should we be looking at for those NOLs to flow through the P&L?

Keith W. Pfeil: Yes. So it will not give us accretiveness to the P&L. Think about these as cash tax savings, right? They’ve essentially taken that credit in the past. They weren’t able to utilize it. We are now able to utilize it to reduce the amount of cash tax that goes out the door. That $141.5 million, I’m going to give you a broad range because it’s a very detailed calculation, but think in the range of 40 to 50 years. It will be over an extended period of time.

Jason Hart Wittes: Okay. That’s helpful. And then maybe just one strategic question. On the sales force, I think you had mentioned that you’re pretty much done with the integration between Globus and Nevro — excuse me, Globus and NuVasive, but there’s still some dis-synergies, I think, that are still kind of flowing through. How are those looking for this year? And how should we be thinking about those going forward?

Keith W. Pfeil: This is Keith. I mean as I think about kind of the U.S. spine sales business, I mean, at this point, I’m thinking about how do we grow our territories and drive organic placement. So really, I don’t necessarily look at a dis-synergy. I look at how many competitive recruits am I bringing into the business and what is what I would call the relative scale of those competitive reps that we’re bringing in. As I look at what we’ve done so far this year, we’re really happy with our second quarter. And what I see is a — from a scale perspective, the reps we’re going after could bring more dollars with them when I think about the average number of dollars per head. So as we look at that and then look to the back half of the year, we remain very positive. If you go back to my prepared remarks, I commented on 19 weeks of growth. We’re seeing that growth across the business. It’s not just like one territory. We’re seeing good, solid, sustainable growth.

Operator: With no further questions, that concludes the Globus Medical earnings call. Thank you for your participation. You may now disconnect.